Higher Inflation, Lower Oil Price & Gold Bounce Back

 Higher Inflation, Lower Oil Price & Gold Bounce Back

Higher Inflation, Lower Oil Price & Gold Bounce Back.

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EURUSD: The financial markets are shaping up to a return of higher interest rates. With the US CPI year on year (YoY) print coming in at 6.2%, the highest inflation print in the last 3 decades, 31 years to be exact. Interest rate movements are priced in higher going into the year 2022. As markets are anticipating a possible 2 US Federal Reserve interest hikes in 2022 and conclusion of hiking by early 2023 with inflation proving to be persistent, the hiking cycle could possibly be longer. The USD gained bullish momentum as markets reacted to the US CPI print, gaining as much as 0.48% against the EUR on announcement of the CPI data. EURUSD currently trading at 1.1444, this is the year’s (2021) best performance of the greenback (USD) to date. The next key level for EURUSD is likely to be 1.1400, this will be reached with more USD bullish fundamentals.

Oil: With crude oil retraced below $81 per barrel, markets await to see if the retracement is sustained. As markets continue to experience pandemic supply constraints and prices continuing to be pushed higher by consumer demand, little seems to suggest that the price of crude will remain at lower levels. However with demand forecast to be higher, US President Joe Biden choosing not to tap oil reserves for now, US stockpiles increasing 1.001M vs the forecast barrels of 2.125M and OPEC to maintain it’s gradual production increase to pre-pandemic levels a bounce back could be possible. Though a close below $81 brings $78.50 into focus, with strong support at the $77.30 level. Though this could possibly be the pull back before the price action tries to move higher to the previous highs of $85 per barrel.

Gold (XAUUSD) gained it glitter on inflation concerns leading to the US CPI data print. The precious metal reached highs of $1868 in the week thus far. XAUUSD pushed higher as the precious metal is seen as a hedge against inflation with US CPI printing 6.2% the highest inflation print in 31 years. Gold gained 2% on the CPI data print 6.2% that spooked traders, the narrative that inflation is transitory could possibly be nullified going into 2022 as inflation could remain persistently high. With key resistance at the $1868 price action, a close above this will bring $1890 and subsequently $1900 into focus.  

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Terence Hove

Terence Hove, a Financial Markets Analyst with multi-asset brokerage firm Exness completed his BBusSci: Economics at Monash University. With over 8 year experience within financial service his expertise is well developed in financial markets analytics and trading. Exness is an industry leader that provides reliable online trading in financial markets. Exness offers professional services on the above-mentioned assets, please follow the link to learn more on the offering exness.com

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